Electric Mobility settles with the FTC

Thursday, April 28, 2011

Is there a third reason that Electric Mobility will be ceasing operations sometime this summer?

Electric Mobility recently settled with the Federal Trace Commission (FTC) over charges that it improperly used a "Win a Free Rascal" sweepstakes as a way to call 3 million people on the Do Not Call registry since 2003.

"In small print under the part of the sweepstakes form provided for the entrant's phone number, EMC reminded consumers to list their numbers so the company could contact them if they were 'the next lucky winner,'" the FTC states in an April 21 release.

The FTC charges that this violated both the FTC Act and the Do Not Call provisions of the Telemarketing Sales Rule. The FTC explained: "The FTC's Telemarketing Sales Rule allows a company can call a consumer on the Do Not Call Registry for up to 18 months if it has an 'established business relationship' with the consumer and he or she has not asked the firm to stop calling. However, under the rule, a company may not rely on a completed sweepstakes entry form to establish a business relationship with a consumer. In fact, the FTC consistently has said that simply obtaining a consumer's phone number--as EMC did with its sweepstakes--does not establish a relationship that would exempt it from the Do Not Call rules."

As part of the settlement, Electric Mobility Owner Michael Flowers has paid a $100,000 penalty. The FTC has suspended a $2 million penalty to the company due to its inability to pay. However, "If (Electric Mobility) is found to have misrepresented its financial condition, the full penalty will become due immediately," the FTC states in its release.

The settlement does not constitute an admission by Electric Mobility that the law has been violated, according to the FTC.

"The investigation took place over four-plus years and as far as we know there was not a single consumer complaint," Flowers said. "It's also interesting to note we gave away 300 Rascals since we started the contest in 1986, which made a lot of folks happy."